Caterpillar, Shaanxi Fast Gear to Produce Components, Transmissions in China

Exports likely from new joint venture

Caterpillar Inc. agreed to form a joint venture with Beijing-based Shaanxi Fast Gear Co. Ltd. to manufacture drivetrain systems and other components for Caterpillar machinery, and to produce a full line for automatic transmissions for cars and commercial vehicles. Caterpillar will hold 45% in the venture and Shaanxi Fast Gear will hold 51%, while its subsidiary Shaanxi Fast Auto Drive Group Co. Ltd. will hold 4%.

There was no indication of the equity value of the prospective company.

China is the target of much of Caterpillar’s global expansion strategy. Earlier this year an executive of the company indicated it plans more than $1 billion in investments for new manufacturing capacity there. Late last year it announced a joint venture with Avic Heavy Machinery Co. to manufacture medium- and heavy-duty hydraulic pumps and motors for construction equipment, including Caterpillar equipment. Prior to that, it detailed plans to build a new plant in Wujiang to produce mini hydraulic excavators, beginning in 2012.

In addition to producing Caterpillar machine components, the new Shaanxi Fast Gear joint venture will manufacture the Cat CX series on-highway transmission line, for installation in Caterpillar and Fast Gear vehicles for global distribution.

Shaanxi Fast Gear Co. Ltd., or Fast Gear, is partly owned by Weichai Power Co. Ltd. and is China’s largest manufacturer of heavy-duty manual transmissions. The group also is China’s largest exporter of heavy-duty automotive transmissions and automotive gears, and related forgings and castings.

"This joint venture continues the Caterpillar strategy to develop partnerships with leading Chinese companies as we deploy our comprehensive business model in China,” stated Hans Haefeli, vice president of Caterpillar’s Advanced Components and Systems division. “It will provide Caterpillar with competitive drivetrain components and systems as well as an Asian source for our CX28 and CX31 transmissions."

The partners did not detail the location of their new venture, nor its start date. Relevant Chinese regulatory approvals are pending.

"This joint venture with Caterpillar will propel us to the same leadership position in heavy-duty on-highway automatic transmissions that has taken us many years to build in heavy-duty on-highway manual transmissions," stated Li Da Kai, chairman and president of Shaanxi Fast Auto Drive Group Co. Ltd.

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